Vacant, Abandoned Housing Is A Blight On Cities

In Cuyahoga County, Ohio there are 17,000 vacant, foreclosed properties. In Baltimore, there are 16,000. These properties sit, unmaintained, with boarded up windows, affecting not just their own value, but the values of homes nearby.

From Kiplinger’s:

“The homeowner just assumes, well the bank’s going to take my house, but the bank can make the economic decision not to take the house,” said Cindy Cooper, a Housing Court prosecutor in Buffalo. “Then that leaves two parties walking away, each one thinking that the other is going to take care of the house.”

Pianka still lives in the neighborhood where he grew up and knows firsthand the blight of houses with boarded-up windows.

“The scrappers are taking the jewelry off the corpses that are left,” he said from his 13th-floor office which overlooks frozen Lake Erie.

He’s well regarded among members of the Warsaw Neighborhood Block Watch Club, who have spent time in his courtroom, determined to see something done about open, vandalized homes in their Slavic Village neighborhood.

Vacant houses, some stripped bare of aluminum siding, dot the streets, casting a gloom on their well-maintained neighbors.

“It scares people,” said Joyce Porozynski, a block watch member who has lived in the neighborhood most of her life. “Many people have given up.”

Across the street from Charles Gliha’s cozy 120-year-old home stand three vacant houses, including one with the first-floor windows broken out. Another is being repaired, and a sign in the window warns would-be thieves that there are no copper pipes inside.

Cities blighted by empty foreclosure properties are setting up land banks in order to get unused property into the hands of someone who will maintain and develop it. Some cities are setting up “Bank Days,” where buyers and lenders can hammer out the details.

“If the house is not in a terrible state, a lot of times the bank will discharge the mortgage so that the property can be donated either to a neighbor to be demolished or a nonprofit organization for rehabilitation,” Cooper said. Other times, each side pays a share.

Wow this is a simple one, whoever owns it pays for any public service calls due to neglegect. If neither party wants ownership then it goes to city auction. If it is deemed a liability it gets charged back to the owner for removal.

Baltimore’s vacant houses are not entirely due just to foreclosures – the article talks about the city dealing with it six years ago, before the housing bubble even started. Heck, b-more was selling dollar homes 20 or 30 years ago, and even at the height of the bubble you could buy homes through city programs for $5000 and up.

It’s not just foreclosures, it’s old and expensive to maintain/fix up housing stock, high crime, suburban flight, bad neighborhoods, the inconvenience of city living vs suburban, and a ton of other factors.

Foreclosures aren’t helping, but they aren’t the cause of all 16,000 of Baltimore’s vacant properties, many of which probably have been vacant for years, if not decades.

@laserjobs: Wow, the amount of faith you place in (a) police (b) municipal gov’t and (c) private owners is amazing. If a citizen “walked away” from an entire house, do you think a $100 nuisance citation from City Hall is going to get paid ?

Part of the problem is that mortgages are sold several times over and it’s hard to figure out who the owner is. Often foreclosure is started, so the owner moves out but then the bank decides it’s not worth it so they stop the foreclosure.

Cities are starting to streamline the process, but it takes time and muscle to make parties respond. Simply seizing the property doesn’t make them clean it up; they are now restricting the banks ability to make loans in areas where they aren’t taking care of the properties. That in itself is something that takes a lot of work, by an overworked, underfunded municipality.

Let me get this straight… Someone buys a house, the value increases, they refinance and take out the equity, price goes up, they take out equity again. These same people took vacations, bought cars, boats, TVs, etc…

@Landru: It is never had to find the owner of a performing mortgage, just a non-performing one. Municpalities need to look at the title and charge all services rendered to the person recoreded on title. If their is a note on the property, the note holder gets the bill to add to the debt. If responsibilty is not taken for paying the bills and required repairs, it goes to city auction.

@MDSasquatch: Yes, I’m sure the average profile of someone who defaulted on their mortgage is a boat owner who jets off to the south of France at a moment’s notice. Stereotype much? I suggest you try reading up on some of the shenanigans that unscrupulous lenders pulled on people to get them into mortgages they couldn’t afford on their income. Or better yet, visit some of these neighborhoods and maybe re-evaluate your ignorant opinions.

Its not fair to say that. My parents got foreclosed because my mom got cancer, the 401K was nearly emptied to pay her medical bills, and there was no money to make the house payments anymore. They owned the house for over 10 years, so there was no stupid interest only loan or things like that. I hate the gross overgeneralization as to why some people get foreclosed. My parents have never had any “toys”.

I’d love to get an old home in an area like this and fix it up as a project. Stuff like this isn’t about making a ton of profit when I’m done, but saving the character old houses give our country as a whole. Taking some 4-6000 sq foot building and making it into a nice 3 flat living space is the stuff I dream of. Too bad I have a hard enough time keeping code enforcement off my ass here in Tampa because my paint is chipping while I have to gut the place I bought with my wife in 2006.

My wife and I are buying a foreclosed, vacant house right now, hopefully closing next week. I’ve made an assumption, and commenters can hopefully straighten me out if I’m wrong:

Realtors probably don’t make much off of bank-owned, foreclosed, vacant properties. This would explain a lack of interest in buying one – if the seller (and/or their realtor) doesn’t want to lift a finger, you’re going to have a harder time.

So, vacant houses stay vacant because it is much easier to buy a newer, nicer house from a builder or a motivated, non-bank seller. Ours has a beautiful yard in the best school district in the city, so we’re ok with fighting a bit for it, but if the school wasn’t a factor, we would have kept looking at newer, non-foreclosure homes.

I could be wrong. I also suspect our main difficulty is that the selling realtor in our case is just a jerk.

I know there are exceptions to every situation, but ask yourselves this: how many people took out loans they knew they may not have the ability to afford in the future and spent the money frivolously? How many were forced to sign these loans?

To the lady that parents lost there house because of cancer, I can sympathize, my wife had a brain tumor, had surgery, missed work for a month, then was fired by AAA on her first day back. We were living paycheck to paycheck at the time and had it not been for a federal agency, we would have got the boot from our house too.

sorry to hear about your wife. I guess you came off as ignorant because all you talked about was people buying toys and stuff they couldnt afford, which I agree is a problem in America, but not really the reason why most people are being foreclosed.

@MDSasquatch: “how many people took out loans they knew they may not have the ability to afford in the future and spent the money frivolously? How many were forced to sign these loans?”

Even with the meltdown in progress, I was astounded at how many people advised us to go higher on our price range because “you’ll be making more money in a few years”. Had we listened to one of any number of otherwise smart people who tend to advise in our best interests, we’d be in sorry shape 5-10 years from now.

I don’t find it hard to believe at all that otherwise smart people got a little bullied into bad loans and/or too expensive homes. Were they forced? Certainly not. But if people thought they were getting sound advice from people they trust it would have been hard to ignore.

@Jim: One of the houses I was looking at 6 years ago was a foreclosure. When I gave my agent the address, she said it was a foreclosure and not worth the trouble. I insisted. The house looked great from the outside, the inside was kinda trashed. The agent told me the FIRM sales price included new carpets and kitchen tile and the removal of the junked car from the backyard, but the rest was the new buyers resposibility (missing cabinet doors throughout the house, fist sized holes in the walls, doors off hinges, etc.).

I told her the work was not an issue, and I would have bought it if it didn’t have a huge “helipad” surrounded by a 10′ fence in the backyard for the neighborhood phone and electric access (an easement to say the least).

She still was overly persuasive in the pitch to deter me from buying it (“It’s not the damage you can see, it’s the damage you don’t see.” etc. etc.).

I later found out from a different realtor the bank was giving a lower than standard comission on it, and had to wonder if that’s where all the negativity came from.

Look closer: Baltimore has empty houses. Have you been to Baltimore? Sampled the job market? I’m not talking the MBA job market, I’m talking the blue collar/cube slave job market. Do you want to live there? I don’t blame you.

Empty houses are a symptom of something larger, not a disease in and of themselves.

I wish come of this foreclosure action would happen around me. It was announced recently a new state assisted house development with 2-3 bedroom town homes is now open to buyers…starting “in the low 300 thousand” range. I repeat, state assisted housing 300K. How wonderful.

I’ve said it before about Baltimore- many were bought as “investment” homes by people thinking someday they’d cash in and get rich, but were never rented out and no upkeep done so they just sit vacant and then the owners bitch and cry when the city tries to take them and turn them over to developers.

Its not the whole problem, but I’m sure that there is some correlation between Ordinary Joe becoming a property investor, the housing boom and vacant properties.

If homes were off the market for non-market reasons (some guy sitting on several in a future up-and-coming area) then that would have created a false scarcity and rise in prices. I’d love to see data comparing the numbers of homes owned by a single person and the rise in vacants. May not be causation, but correlation for sure.

Hm, I know this question is dumb as wood, but I still don’t get why lower housing prices are bad. I mean, wouldn’t it be good for people who are trying to buy/lease a house since they can now afford it?

@nemesiscw: Lower home prices are bad because it reduces equity in a home you have purchased. So say you bought a home 2 years ago for $200,000. You pay our mortgage and maintain your home. Today because of your crappy neighbors your home is now worth only $150,000. So you’re paying mortgage on a home that isn’t even worth the value you’re paying for. Also the other problem is that you cannot take out a home equity loan as well since you essentially have none in the home.

@gamehendge2000: while my aunt was renovating her home, the neighborhood board sent several letters stating that the pile of dirt in the front lawn was an eye sore and asked that they remove it promptly (she was trying to level the yard). We also received complaints about not bring the cash can up from the curb fast enough after trash day. Granted, you cant buy a house in that neighborhood for less then 750k anymore, its still ridiculous. Im pretty sure they would kill you if you tried that there lol.

There are many, many cities that don’t have the processes in place to handle problems associated with foreclosed and abandoned properties. After all, they never had a reason to.

There was an article in my local paper a few weeks ago; the gist of it was in 2005 the city spent about $15,000 dealing with abandoned properties. This was money spent on boarding up windows, shutting off utilites, etc. in cases where the owner couldn’t be found or compelled to address the problem.

Well, last year they spent $120,000 and this year they’re budgeting $160,000. This doesn’t include indirect costs such as police calls.

@Jim:
My wife is a Realtor, and she tells me that some banks list foreclosures on the MLS with a 5% commission. She’ll still help a client if they want to look at a foreclosed house that’s not listed, even though there’s nothing in it for her. She figures next time they need a Realtor they’re going to call her. And because she’s got other income she’s not as cut throat as other agents.

One of the things you can do to fix the problem is tax the land for it’s location instead of the building for it’s value (Value Capture Tax). If you have a run down vacant building under the normal tax code it’s no big deal; as the building falls apart your tax bill goes down. If you shift the tax to the land you collect more tax from a run down building or empty lot in the middle of the city.

Once the owners realize they are going to have to pay as if they had a nice building there they will be motivated to put a nice building there to make money to pay the tax. It also means tax debt on deserted property will allow the city to foreclose, sell and get the property back on the tax rolls (as long as they don’t put a giant lien on the property that they expect a new owner who had nothing to do with the tax debt to pay.)

here in the bay area the cities hit hardest by this are the newest cities , the ones with all of the ugly tract homes and walmarts and starbucks that magically appeared over the past 6-8 years. these cities do not have the infrastructure necessary to help families stay in their homes.

they also don’t have any apartments. so my advice to renters: if you like your place and your current rent (and youre not in a rent control city) sign a new lease now and lock it in. all of these former homeowners are going to be looking for a place to live soon.